Oil prices increased early on Friday as investors reacted to statements from the U.S. Treasury secretary suggesting that the country’s economy may be stronger than initially thought, despite weak first-quarter data. This, coupled with ongoing conflicts in the Middle East, raised concerns about oil supply. Brent crude futures rose by 0.38% to $89.35 a barrel, while U.S. West Texas Intermediate crude futures increased by 0.39% to $83.90 a barrel.
Treasury Secretary Janet Yellen mentioned in an interview with Reuters that U.S. economic growth might actually be better than indicated by the latest data. She suggested that the GDP growth for the first quarter could be revised higher once more data is available, and inflation is expected to return to more normal levels after certain unusual factors affected the economy’s performance.
Before Yellen’s comments, worries about escalating inflation had been affecting oil prices, with investors speculating that the Federal Reserve might delay interest rate cuts until September. The release of Personal Consumption Expenditures (PCE) inflation data for March on Friday will be closely monitored by the Fed as it aims to achieve its 2% inflation target.
In addition to economic factors, supply concerns heightened as tensions continued to rise in the Middle East. Israel increased airstrikes on Rafah in Gaza and indicated plans for a significant military assault, despite warnings from allies about potential mass casualties. The situation in the region contributed to the overall uncertainty surrounding oil markets.